API Projects Fall in US Crude Inventories

Daily Analysis - 22/11/2017

Oil Prices Remain Firm Ahead of Thanksgiving Holiday


Oil prices are climbing on Wednesday after a reported drop in US crude stockpiles and rising investor speculation that an OPEC-led output cut will be extended beyond next March. OPEC will meet on November 30th in Vienna and is widely-tipped to extend the current production cut deal through 2018.

Oil Bulls Mount a Comeback

Crude prices gathered momentum following a weekly report published by the American Petroleum Institute late on Tuesday.  The report outlined US crude supplies falling by 6.40 million barrels for the week end November 17th. Official Energy Information Administration inventory data is scheduled for release later in the session, and may confirm the drawdown estimated by API. The current consensus forecast is anticipating a stockpile draw of 1.545 million barrels.

Oil prices also received a lift after a shutdown of TransCanada's Keystone pipeline that links Alberta’s oil sands with US refineries following last week’s oil spill. South Dakota regulators commented that they could revoke the company’s permit to operate the pipeline if an initial probe found that TransCanada violated its license. Brent futures for January delivery were last seen trending above key resistance formerly sitting at $63.00 a barrel.


US Existing Home Sales Increase by Most in 7-Months

An easing of hurricane-related disruptions boosted sales of previously owned homes in the United States during October.  Figures unveiled by the National Association of Realtors showed existing home sales climbing 2.00% to a seasonally adjusted annualized pace of 5.48 million units last month, topping the consensus estimate anticipating home sales rising to a yearly pace of 5.42 million units. However, contrasting with the gains, the September sales rate was revised lower to 5.37 million units from a previously reported 5.39 million units.

Sales in Houston and Jacksonville, which were worst hit by Hurricanes Harvey and Irma, rebounded last month, while sales in South Florida remained weak. Existing home sales account for close to 90.00% of residential transaction activity in the country, dropped -0.90% on a year-over-year basis through the end of October. Dow futures closed at a record 23547 on Tuesday after a rally in tech stocks broadly lifted equity indices.


UK Factories Report Massive Jump in Monthly Orders

A surge in overseas demand saw British factories enjoy their biggest deluge of new orders in close to three decades during November, adding to signs that the post-Brexit vote weakness in the Pound is helping manufacturers. According to a leading survey conducted by the Confederation of British Industry, the industrial order book balance soared to +17 this month from -2 in October, marking its highest reading since August of 1988 while smashing economist forecasts of a +3 figure.

The survey’s gauge of export orders zoomed to +20 in November from +5 in the prior month, hitting its highest level since June 1995. The latest bullish figures should come as a welcome boost for Chancellor Philip Hammond before what is expected to be a difficult Autumn Budget announcement later in the session. The blue-chip FTSE 100 finished 0.30% higher on Tuesday, buoyed by better-than-expected quarterly results from low-cost airline carrier EasyJet.


Mexican Peso Rallies to Highest in a Month

USDMXN slid more than -1.00% on Tuesday, breaking below a key technical level in the process amid optimism about the North American Free Trade Agreement after the fifth round of talks to repurpose the agreement drew to a close yesterday.  The head of Mexico’s business chamber Juan Pablo Castanon highlighted the progress, commenting that negotiators are close to finalizing the framework on the telecommunications, energy and e-commerce provisions of the agreement. NAFTA, which was activated in 1994, governs much of the more than $1.00 trillion in annual trilateral trade conducted between the deal’s partners.

Washington has repeatedly threatened to walk away from the deal with Canada and Mexico unless it was reworked in its favour, arguing that the pact had hollowed out US manufacturing and triggered a trade deficit of over $60.00 billion with Mexico.


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